A liaison office in Switzerland does not have its own legal personality, consequently, it is not separated by the parent company's heritage, doesn't have a distinct name or trade name or own property. When experiencing financial difficulties, the parent company will be liable for the office's debts.
The procedure of setting up a liaison office in Switzerland is less demanding, being in a strong dependence with the company which opens it.
The representative office has no legal or economic autonomy and depends on the principal company. It does not have the power to enter into contracts and its employees do not have the authority to bind the company. Moreover, when the liaison office wants to conclude commercial activities in the country where it was opened, it must necessarily have the recourse of the main company.
There are few formalities to be followed in order to set up a liaison office in Switzerland, starting with the submitting of a declaration of existence at the center for business formalities of the chamber of commerce and industry. However, this procedure does not enter the representative office in the Commercial Register, as this form can not function as an independent company. The only restriction is provided for the representative office of a foreign bank that still needs the authorization of the Swiss Federal Banking Commission before they can operate.
When setting up a liaison office in Switzerland, the founders must be aware that, as long as it doesn't conclude any sale and is not directly providing service to the clients of the foreign company, it is not subject to income tax. Moreover, as it doesn't make any sales and works exclusively on behalf of the foreign office, it is not subject to VAT. However, the foreign company can reclaim the VAT charged on the costs of installing and finance liaison office.
A liaison office in Switzerland is not engaged in activities of a professional nature and it is not subject to territorial economic contribution. However, there must be paid the property tax.
When it comes to set up a liaison office in Switzerland, the founders must be aware that, for payroll services and social duties, all staff (excluding expatriates) falls within the general scheme provided by the law. The liaison office is subject to the same obligations as social enterprises in the country in which it operates.
The liaison office is a more flexible than a branch structure. However, when it comes to exercise a commercial activity, it is treated as a permanent establishment and therefore subject to the same legal, tax and financial obligations as a branch structure.